9-7
A. Deferred Revenues
607,000
Operating Revenues-Student Tuition and Fees
B. Accounts Receivable
607,000
12,000,000
Operating Receivable-Student Tuition and
Fees
12,000,000
Cash
9,600,000
Accounts Receivable
9,600,000
Operating Revenues- Student Tuition and Fees
650,000
Deferred Revenues
650,000
C. Operating Revenue Deduction- Scholarship Allowances
Accounts Receivable
D. Scholarships and Fellowships Expense
930,000
930,000
760,000
Accounts Receivable
760,000
10-2
a. What are the financial reports required of all not-for –profits? What additional
report is required for voluntary health and welfare organization?
The financial reports required of all not-for- profits are: Statement of financial
Position, Statement of Activities, and Statement of Cash Flows. Statement of
Functional Expenses is required for voluntary health and welfare organization.
b. List the three classes of net assets.
Permanently restricted net assets, temporarily restricted net assets, and
Unrestricted net assets.
c. Outline the accounting required for property, plant, and equipment. Include
accounting for plant acquired with both unrestricted and restricted revenues.
With the exception of collections, fixed assets may be recorded as either temporarily
restricted or unrestricted, depending on the policy of the organization. An asset is
acquired with temporarily restricted resources and it is acquired with unrestricted
resources. All fixed assets other than land and museum collections are depreciated.
If fixed assets are recorded as temporarily restricted assets, then a reclassification is
made each accounting period to unrestricted resources in an amount equal to the
depreciation or an allocation based on the time the asset is restricted, whichever is
shorter.
d. Outline accounting and reporting for investments.
FASB statement 124 requires that investments in equity securities with determinable
fair values and investments in debt securities be carried at fair value. Investments is
recorded as increase in unrestricted, temporarily restricted , or permanently
restricted net assets, depending upon the presence or absence of donor restrictions
or legal requirements. Unrealized gains and losses and realized gains and losses on
investments are reported in Statement of Activities.
10-3
a. Outline revenue recognition criteria for resources restricted for (1) time and (2)
purpose.
Contributions are recorded are revenue in the appropriate net asset class when
unconditional. This means that unconditional pledges, even multiyear pledges, are
recorded as revenue when pledged. Temporarily restricted net assets are restricted
as to propose, and time period, or plant acquisition.
Revenues, including contributions, are considered to be unrestricted unless donorimposed restrictions apply. FASB statement 116 requires contributions, including
unconditional promises to give, to be recorded as revenues when the promise is
made. Conditional promises to give are unrecognized until the conditions all are met.
b. Describe the difference in accounting for contributions with a condition and a
restriction.
Conditions require some action on the part of the donee before the gift is
given. Restriction is created when the donor indicated that contributions are to be
expended for a particular purpose or in a certain time period.
c. Outline the requirements for recognizing contributed services as revenue.
Contributed service are recognized as revenue only when the service creates or
enhances nonfinancial assets or required specialized skills, is provided by someone
possessing those skills, and typically would be purchased if not provided by donation.
d. Outline accounting for multiyear pledges.
FASB Statement 116 requires multiyear pledges to be recorded at the present value
of the future collections. As time passes, the present values of the pledge receivable
will increase. At the end of each accounting period the difference between the
previously recorded revenue and the new present value is recorded as additional
contribution revenue, not interest.